UAE Economy, Research Paper Example

Government Policy Used to Keep Growth Increasing

Governmental action is the primary reasons that although a majority of the world’s nations are currently suffering a recession, the UAE economy is recession proof. This is primarily due to government policies that have recently enhanced real estate and construction, the financial market, and tourism. These actions have helped minimize economic risks by developing a safety net that will prevent the GDP from dropping too low.

Fortunately, because the UAE continues to develop its real estate, prices of its buildings will continue to grow. Construction will not halt, so the value of these properties will continue to rise. A major impact that the world’s recession can potentially have on the UAE is slowing down this construction rate, but this economic event will be unable to prevent construction altogether. There will continue to be a demand for these properties to some extent, which will keep the economy stable.

Next, in order to ensure that the global market does not have an impact on the UAE, it is important for banks to keep their interest rates stable. It is essential to keep finances available, or it will be difficult for the area to protect itself. A major downfall in many of the countries involved in the world’s recession is that bank’s increased their interest rates because they wanted to ensure that they would get paid back. Rather, it is important for the entire country to collaborate to ensure that the current economic crisis does not worsen. Therefore the UAE government encourages banks to not engage in this type of behavior. If the interest rates must raise, it should not be done to any extreme extent.

Lastly, the UAE’s economy is currently strong because its tourism is high. However, the UAE is a widely visited area and even though there would be reduction in this due to the damaged economies of other nations, this will not happen to an extreme extent. Despite this, it’s important for the UAE to take measures to ensure that it will be protected against the recession in this category. It may therefore be reasonable to invest money in promoting travel to the area, making it seem to be a more appealing vacation destination than other options (Etoday).

UAE Economic Performance for the Years 2006-2011

The UAE GDP growth rate has been relatively instable between the years of 2006 and 2011. In 2006, the GDP growth rate was 4.9, doubled in 2007 at 9.8, and diminished since then. As of 2011, the GDP growth rate was 1.7. While this is a slow growth rate, it is important to consider that the economy had been able to recover significantly from the previous year; in 2010, the GDP growth rate was negative 4.8. This is the lowest GDP growth rate the UAE had experienced. Their governmental interventions were able to stabilize the economy to reach positive growth in just one year, and as of 2012, these policies helped the country return to the same economic growth they had experienced in 2006 (Trading Economics).

It is therefore essential to consider that even though the UAE economy had its low points, it was able to recover from recession. Thus, the UAE recession can be considered to have been experienced in the year of 2010, but as of 2011, were able to escape this economic status. Since then, the country has been generally impervious to the economic world affairs surrounding it. It has built itself in a manner that renders it stable, in contrast to the damaged economies of many countries in Europe.

Conclusions and Suggestions

It is important for the UAE to continue its current economic policy, as it has rendered it impervious to the economic recession that the world is currently experiencing. It should continue to invest in its real estate and construction, financial, and tourism markets in order to continue to mitigate risk. If the country is able to continue to develop these markets, it will be able to resist recession to an even greater extent, and its current GDP will rise.

The UAE’s GDP figures demonstrate that it is able to remain stable in wake of the current recession and it has even recovered from its own brief period of recession in 2010. These figures support the UAE’s current policies and it is important for them to continue in this manner. It is also useful for the UAE to look at the GDP of other nations to determine what they are doing that causes their economic troubles. In particular, a clear problem with the countries of the European Union is their common currency (Barnard). Thus, when the value of the Euro falls in one country, it does so in others. Therefore, when the European Union is strong, all countries are strong, and when several countries are weak, the European Union is all weak. Therefore, it is essential for the UAE to continue investing in its own currency to bypass these issues.

Works Cited

Barnard C. The Substantive Law of the EU: The four freedoms (2 ed.). Oxford University Press, 2007.

Etoday. Recession Looming At Recession Proof Economies, A UAE Perspective. N.D. Web. 12 August 2014. <http://www.streetdirectory.com/etoday/recession-looming-at-recession-proof-economies-a-uae-perspective-uuoecl.html>

Trading Economics. UAE GDP Growth Rate. N.D. Web. 12 August 2014. <http://www.tradingeconomics.com/united-arab-emirates/gdp-growth>